Currency

While you are used to the dollar (USD), the local currency in Italy is the Euro (EUR). Check the exchange rate so you can get a sense of your anticipated cost of living as you look into various on-site expenses at xe.com – USD to EUR.

Euros (symbolized by € or EUR) are issued in €500, €200, €100, €50, €20, €10, and €5 notes, and the coins are issued in €2, €1, 50c, 20c, 10c, 5c, 2c, and 1c denominations. The Euro is also used throughout most of Europe, so you can easily travel from country to country with at least enough to get around upon arriving.

Currency & Exchange Rates

The exchange rate. This rate determines how many euros you’ll get for your dollar before transaction fees are deducted. Be warned: not all financial institutions offer the same rate.
Dollars can be exchanged for euros at most banks in Italy. You’ll probably only need to do this once, since it’s not wise to bring your whole trip’s worth of funds in dollars. Once you have exchanged any cash you arrived with, if you need any more cash, you can withdraw it from ATMs like normal (see below).

There are a few things to keep in mind:

Normal banking hours are Monday-Friday from 9am-2pm. Banks are usually closed over the weekend. If you are exchanging cash, plan ahead so that you have enough cash on hand to last through the weekend if banks are closed.
If you are in a bind, you can exchange money at other exchange booths, such as those at airports, rail and bus stations, hotels, stores, and privately run exchange firms: however, these exchange booths often have less favorable exchange rates.
The commission rate: these are extra transaction fees charged by some institutions. These fees are most often expressed as a flat rate (ie. 5€), but may also be expressed as a percentage (ie. 3% of the amount being exchanged). Be wary of exchange centers that advertise 0 commissions, as these locations often do not offer very competitive exchange rates.
Bring identification. You will need your original passport with you when exchanging money.
Wait in the right place. Be sure that you stand in the right line; often the proper line is marked with the word "cambio".
Travelers' checks aren't accepted. If you purchased travelers checks prior to leaving the US, you’ll most likely need to convert them into cash at the bank or through the company that issued the checks.

Banks & ATMs

Normal banking hours are Monday-Friday from 9am-2pm. Banks are usually closed over the weekend.
ATMs (called bancomats) can be a very convenient way of obtaining cash while in Italy, as they provide quick and easy access to your US bank account. While you will almost inevitably incur fees for every ATM withdrawal, it’s probably the least of the evils of foreign transaction fees.

What to know before withdrawing cash

The ATM card you use in Italy must be associated with a checking or money market account. Cards linked to a savings account may not work.
Verify that your PIN is a four digit number. There are no letters on ATM keypads in Italy. Students have also had trouble using cards when their PIN is longer than four digits.
Take note of any withdrawal limits associated with your card. Most US banks set limits on the amount of cash you can withdraw in any given day (a common one is 300 EUR per day). If you have trouble accessing the funds in your account, it may be that you’ve exceeded your withdrawal limit.
Most US banks charge transaction fees for international ATM withdrawals. Normally, transaction fees are around 2-3% of the amount withdrawn: there also might be set fees of several euros for using ATMs not affiliated with your bank. Transaction fees are charged by your home bank, not the Italian one, so check with your bank for details.
As in the United States, be aware when using ATMs in Italy. Try to use machines that are in well-lit, familiar locations. Be particularly conscious of your surroundings when entering your PIN or withdrawing cash. Once you finish your transaction, put your money and your card in a safe place immediately.
Avoid ATMs that are not attached to a bank. If your ATM card gets stuck in one of these machines, you will not be able to walk into the bank and request your card back. They also tend to charge high fees.
Cash Advances

You may be able to use a credit card (rather than an ATM card) to obtain cash advances from ATMs. Interest rates on cash advances, however, normally begin to accrue from the date on which the money is withdrawn. As such, credit card cash advances can be very expensive and should only be used as a last resort.

Should you have trouble finding a machine that works with your card, check with your home financial institution, as they should be able to give you the location of a machine that functions on your network.

Credit and Debit Cards

Most day-to-day purchases in Italy are made with cash, and you will find that many small businesses do not accept credit cards. In larger cities like Florence, you can certainly use your US credit and/or debit card for most purchases, but you’ll always want to keep cash as a backup. In the event that the bank places a hold on your account, you won't be able to use your credit card anyway, so it is always best to carry an ATM card in case of an emergency.

Be aware of fees: Make sure to ask your bank about their international transaction fees. They may charge you a flat rate of up to $5 - 7 per transaction, or alternately a certain percentage of your transaction. Know before you start blindly swiping your card – you could spend as much on fees as on certain small products or services themselves. You may want to look into credit cards that offer no foreign transaction fees if you qualify and can justify any other annual expenses.

Notify your bank of travel: Let your bank know that you will be traveling and are planning to use your card/s abroad. If your bank notices activity on your account in Italy and you haven't notified them of your travel plans, they will place a hold on your account. Avoid this headache by calling ahead or notifying them via their website of your travel dates and all the countries you plan to visit.

In the case that your bank does place a hold on your account, don't panic. Typically this can be cleared up with a simple call to the bank to let them know that the activity they recorded is not fraudulent. If you have a joint account with a family member, it can be easier to have them call the bank on your behalf due to the time difference.

Tipping

Tipping is not customary in Italy, at least not at the standard 15 – 20% rate it is in the US. However, a tip of a few euros, 10% or so, is a nice way to show your appreciation for a job well done. Restaurants will oftentimes include a small service fee (and more for large groups), which is usually enough for a server. Plus, servers and other hospitality staff make a decent living wage without the tips.

Wiring Money

If your parents need to send you money in an emergency, the best option is an international wire transfer via MoneyGram or Western Union. General information including FAQs on performing international wire transfers can be found on their websites.